Housing affordability involves more than just the fluctuation of housing costs. It’s about how housing expenses impact one’s ability to afford other necessities. Since housing is a long-term investment and typically a top priority expense, affordability assessments look at how it relates to other basic needs. In the United States, institutions like banks, landlords, and government agencies evaluate applicants’ income-to-housing cost ratio to determine eligibility for housing (Delgadillo and Jewkes 2012). The widely used 30% rule suggests that housing expenses should not exceed 30% of pre-tax income. Exceeding this threshold is considered “cost burdened,” while surpassing 50% is termed “severely cost burdened” by the U.S. Department of Housing and Urban Development (HUD). HUD identifies households with the most critical housing needs as those earning less than 50% of the median family income in their area and spending more than 50% of their income on housing. 

When determining severe housing needs, considering a household’s total income is crucial. Some families may spend a significant portion of their income on housing but still have enough left for other necessities due to their overall income. Thus, solely relying on the percentage of income spent on housing may not accurately gauge financial strain on essentials like food and transportation (Stone 2012). Michael Stone proposes the residual income approach, which assesses the income remaining after deducting housing costs. This method identifies “shelter poverty,” where households cannot afford basic needs due to high housing expenses. By calculating the income required for essential expenses, it determines the affordable housing expenditure percentage. If a household exceeds this percentage, it’s deemed shelter poor. Since 1970, roughly 30-36% of U.S. households have been classified as shelter poor.

This aligns with HUD’s housing affordability criteria, where around 45% of renter households were considered cost-burdened in 2020. However, there’s a disproportionate impact on households of color. For instance, 54% of Black renter households, 52% of Latino renters, and 44% of white and Asian renters were cost-burdened (Joint Center for Housing Studies 2020). When considering the shelter poverty measure, 50% of renter households and 25% of homeowners are deemed shelter poor (Stone 2012). This measure reveals a different demographic composition. Families with children are more prevalent among the shelter poor, whereas couples and single-person households are less represented. Latino households are most affected by shelter poverty, followed by Black families, Asians, and Whites. Additionally, women and female-headed households are at higher risk of being shelter poor. Among homeowners, single mothers and the elderly are disproportionately impacted by shelter poverty.

National and local governments can tackle housing affordability by boosting the supply of affordable options or curbing demand for lower-cost housing. Policies can target either the public or private sector. On the supply side, governments can build low-cost housing to increase availability. Public or social housing, owned and managed by government housing authorities, is one such approach. In the United States, large-scale public housing began with the 1949 Housing Act, which allowed urban renewal and created a replacement public housing program (Schwartz 2010). Despite aiming for 810,000 units in six years, this goal wasn’t met until 1968. Construction peaked at 1.4 million units in 1994 but has since declined. By the mid-1980s, public housing lost favor with lawmakers who favored demand-side programs like the Section 8 subsidy. Since 1994, the number of public housing units has steadily decreased with new construction mainly replacing demolished units.

One of the main reasons for creating public housing projects in the United States was to improve housing quality. In 1920, only 1% of U.S. housing units had indoor plumbing and electricity. By 1970, almost all homes had these amenities (Whitehead and Goering 2021). In Europe, housing shortages after World War II led to the establishment of social housing programs. Governments in devastated cities launched large-scale initiatives to address the housing crisis (Scanlon, Whitehead, and Arrigoitia 2014). Unlike in the U.S., European social housing wasn’t limited to the poorest; it was available to working and middle-class families. In countries like the Netherlands, Austria, and Scotland, around 30% of housing is social housing. In England, it’s 20%. Denmark, Hungary, and France are also increasing their public housing stock. Social housing is common in Asia too; for example, in Hong Kong, 30% of all units are publicly owned (Gurran and Bramley 2017). The Hong Kong government can provide affordable housing because it owns the land, making construction of low-cost housing easier.

Housing as a human right

Every country globally has endorsed at least one international agreement acknowledging the fundamental human right to adequate housing (UN Habitat 2009). This right doesn’t mandate governments to construct homes for all citizens, but rather, it entails providing legal safeguards against eviction, ensuring secure tenure rights, and combating housing discrimination. Certain nations, including Mexico, South Africa, Russia, and Portugal, have constitutional provisions guaranteeing the right to housing. However, such language holds little value without concrete policies to translate this right into reality.

In 2003, Scotland updated its Homelessness Act, granting anyone who becomes homeless the right to immediate permanent housing in a public or private rental unit. Scotland thus became the first country to guarantee this right, expanding its definition of homelessness to include various situations like domestic violence, doubling up, or living in unconventional arrangements. The legislation ensures a right to housing, compelling local governments to create more housing units and reduce homelessness rates. By 2020, 80% of homeless applicants had been permanently housed, with the rest often returning to friends or family (Scottish Government 2021). Only 4% of applicants had been sleeping on the streets, with few experiencing evictions. This low rate is attributed to Scotland’s comprehensive homelessness prevention services, including options like government purchase of foreclosed homes for rental and immediate housing placement for individuals leaving institutions (Tars and Egelson 2009). While Scotland’s system isn’t flawless, it has significantly reduced street homelessness by prioritizing holistic solutions.

In contrast, the United States lacks a right to housing. While places like New York City, Washington D.C., and Massachusetts guarantee a right to shelter, this doesn’t ensure access to permanent housing (Solomon 2020). Homeless individuals are often accommodated in large, emergency shelters. Some cities, like Sacramento, are considering right-to-housing mandates tied to obligations to accept shelter, sparking debate among advocates about respecting individuals’ autonomy and dignity (Hubler 2021).